HOUSTON—The pilot flying the hot-air balloon that crashed in central Texas, killing him and 15 others on board, went to prison twice in Missouri on drug and alcohol-related charges, but family and friends say he had stayed out of trouble since.

Alfred G. “Skip” Nichols IV, 49 years old, was arrested by the Federal Bureau of Investigation in 1999 for possessing a controlled substance, and later served roughly 1½ years in the Missouri Department of Corrections after pleading guilty to the charge. Court records show he went back...